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Minister of Economic Development Basil Rajapaksa
I wish to introduce this Budget not merely as one meant for the current financial year but a step taken to implement the 10-year development plan based on the Mahinda Chinthana of 2006 and the Mahinda Vision and reach its goals through new strategies by 2020.
Before the year 2005, Sri Lanka was a country isolated in the world. The entire nation lived in fear and suspicion for 30 years because of brutal terrorism. This was not confined to a single ethnic group, a single religious community, a single area or a single class. It was during that era of fear and terror that the President took over the country where people had lost all hope for the future. It was a time when there was no ethnic harmony and communities were slaughtering each other. Also, the tsunami of 2004 had affected two thirds of the island’s coastal area causing immense destruction to life and property. The entire infrastructure was damaged. There were power supply interruptions between eight and 12 hours a day. Electricity was only a dream to the rural population. The road network remained unrepaired. When the President took over the country, projects like building new roads, expressways, flyovers etc. were only confined to words. Insecurity and travel difficulties were a common feature. Restrictions had been imposed on the public service and the pension scheme was about to be scrapped. All resources were confined to Colombo and not available to the rural areas where over 70% of the population lived. When the President took over the country everything the people of this country needed was being imported while our farmer had no market for his products. He was not motivated because of a policy of importing everything.
At the time, the situation was unwelcome in many ways. The handloom industry was dead and giant factories had closed down. The health and education sectors and human resources were in a state of decline with no investments. The President gave a new vision and new leadership to the country. He introduced the ‘Mahinda Chinthana’ national economic policy as an alternative to the liberal economy which prevailed until then. Mahinda Chinthana Manifesto was implemented based on the “individual, the family, the village and the country.” Accordingly, the President has introduced through this Budget a five dimensional vision to carry this program towards 2020 and beyond. Before introducing the five-dimensional vision, it is necessary here to recall the work done during the past nine years – especially the steps taken to strengthen the individual from the cradle to the grave.
Bolstering family health services and child care
We strengthened the family health service by providing family health officers with transport and other facilities to help mothers and children in accordance with the medical opinion that child care and maternity clinics should be development to make a child’s future secure from the day he/she is born.
Today our rural child care and maternity clinics are on par with such services in any developed country. Our aim is to make this country free of child mortality by ensuring their health from the time baby is in the mother’s womb by providing them with nutrients including Thriposha. In addition to this we have further improved the situation by reducing the price of baby milk foods.
An increasing number of children are admitted to pre-schools as elsewhere in the world. This is accepted as essential by both educationists and health experts. Hence the Government has taken many steps to improve pre-school education by providing the necessary facilities to all pre-schools including those run by Pradeshiya Sabhas and by the entire private sector as a means of self-employment. These include the provision of liquid milk to children from low-income families. This program has been expanded by the current Budget.
Although I have heard the Opposition saying that local milk powder production is very limited I am proud to say that the Nestle Company’s powdered milk production is based on milk purchased from local farmers.
Focus on education
We have also given strength to school children through this Budget. In fact, steps were taken in this direction on a long-term basis through every budget. This time we have increased the number of Grade 5 scholarships to 25,000 and student assistance to Rs. 1,500. During the past two to three years the Government in creating the environment for making rural schools, especially schools conducting preliminary classes, “Child Friendly Schools” by developing 5,000 such schools. Also, the Presidential Secretariat has appointed a special task force to develop 1,250 schools which were on the verge of being closed down. After the appointment of specialised teachers to these schools, the number of such institutions has risen from 9,800 to 10,200. Today the toilets and other health facilities the students and teachers require have been provided to all schools in accordance with international and UNESCO standards.
We have opened 1,000 Mahindodaya Schools to provide the human resources for the emerging economy based on science and technology. Affiliated to them and under construction are 250 schools with laboratories at Divisional Secretariat level. Additional allocations have been made for them under the current Budget. Material resources alone are insufficient for these schools, especially in the rural areas. Therefore allocations have been made for the recruitment of 50,000 teaching assistants to these schools.
Under the last Budget we provided Government Field Officers, Grama Niladharis, Agricultural Research Officers, Divi Neguma Development Officers and Family Health Officers with bicycles. This time we are making arrangements to provide school teachers with motorcycles.
By decentralising the educational administration and giving powers to school principals we have found solutions to the difficulties many teachers hitherto faced when trying to obtain their annual increments and get it certified from the regional offices.
We will be appointing a sports instructor to every school to make our young people healthy. We have also reduced tax on school vans and taken steps to ensure that children travel in safety. Allocations have also been made to provide teachers with lodging facilities when they take up duties in difficult areas. These steps have been taken in coordination with Provincial Councils.
Allocations have also been made to establish a fully-equipped Teacher-Training College at Maharagama and modernise all teacher training courses to raise the standard of their services. It is also essential to establish a management and entrepreneurial education faculty and a technological science faculty at the Teacher Training College at Meepe. If the country is to make proper use of Mahindodaya laboratories and technology science laboratories it is vital to have suitable teachers for the purpose.
In addition to normal children, there are many disabled children in any society. Therefore we should not allow such children to become burdens on their families. The President had paid special attention to this matter and decided to give these children special privileges including a special travel allowance. The Government will bear the transport costs and direct them to schools which have the facilities to develop the skills of such disabled students. Their teachers too will be given special allowances for this purpose.
Concerning pirivena education, it received much assistance, not only from the current Budget but also from previous Budgets. In 2006, the number of Pirivena students was 55,292 whereas in 2013 the number rose to 66,435. For the first time, each pirivena was given Rs. 500,000 last year. Under this Budget the amount has been doubled thus strengthening the pirivena education. In the last Budget, an allowance of Rs.15 per day was given to every student monk while each lay student was paid Rs.5 per day.
We have to appreciate the steps taken to help our children adjust themselves to future society by improving their knowledge on the trends of the modern world, through Nenasala established in every Grama Niladhari Division. Funds have been allocated for the subject of education not only by the Education Ministry but also by many other sectors. It has been proposed under the current Budget to increase the number of students enrolled for technical and tertiary education to 100,000 and to provide 50,000 scholarships for that purpose. Also proposed is to increase the financial assistance given to each student to Rs. 3,000.
The Government led by the President has allocated a massive amount for higher education under every budget. The related problems were solved. Steps were taken to strengthen facilities by providing funds from time to time for hostels and various faculties. This time it has been proposed to increase the Mahapola Students’ assistance to Rs. 4,000 each. Proposals have also been made to build new hostels in universities and new educational faculties. Funds have been invested to establish an engineering and technical faculty in the Jayewardenepura University and information technology faculty at the Kelaniya University. Funds have been allocated for developing the Sabaragamuwa University’s Livestock and Agricultural Section and the Ruhuna University’s Oceanic Resources, Medical and Information Technology and Diabetes Research sections. Steps have been taken to improve the human and material resources by increasing the number of university students and raising the allowances of academic staff.
Further education and research
The current Budget has focused on an area to which no attention has been paid so far. Previous Governments followed a policy of ignoring the education of young people after they completed their education and found jobs. Giving such persons career advancement opportunities, by improving their knowledge and efficiency in accordance with the methodology the developed countries follow, is one of the areas given priority under this Budget.
Attention has been paid to establishing a transport educational institute for private bus operators and strengthening the existing unit. A proposal has also been made for a Plantation Scientific Institute to train planters and small holders. Steps will be taken to develop the Ocean University for doing research in the field of fisheries and funds have been allocated to develop five vocational training institutes in the districts of Badulla, Hambantota, Kurunegala, Vavuniya and Ampara among other areas to improve skills of those seeking foreign employment.
Attention has also been focussed under this Budget to improving the sports sector by improving training facilities, including having modern sports stadiums, especially launching an islandwide program for training rural youths to participate in the Asian Games.
Large funds have also been allocated for the Tea Research Institute Talawakele, Rubber Research Institute Agalawatte, National Science Institute, Post-Graduate Medical Institute, Nuclear Energy Institute, National Research Council, Nano Technology Institute and other such establishments. I focused attention on this area to draw the nation’s attention to the need for taking the country forward beyond 2020 through educational development and developing science and technology. The objective is to develop the human resources required for building a knowledge-based economy. The foundation for it has already been laid.
Creating opportunities
The President’s first target was securing peace. It helped us to reclaim one third of the land the country had lost and also acquire two thirds of the sea off the coast. With the dawn of peace the people won the right to live without fear and suspicion. A major investment had to be made to reach that objective during the first few years. Around the same time the President took the initial steps to develop the country’s infrastructure. What did he say immediately after the defeat of terrorism? “Let’s build the country now.” The President realised that the country cannot move forward without improving the basic infrastructure. Thereafter he increased state investment on a large scale under the theme, “The individual, the family, village and the country.”
At first, steps were taken in every sphere to improve the livelihood of the individual under the Divi Neguma program. Creating opportunities for self-employment, creating more jobs in the private sector and expanding the public sector were among the steps taken in this direction. In 2003, the number of public sector employees was 633,729. By 2014 it has risen to 1,298,529. This is 84.14% increase. People were employed in every sphere, including planning, administrative, educational, engineering, accountancy, medical and nursing. During the past years 28,365 nurses joined the public health service. Also recruited were 112,662 teachers, 88,069 development officers, 20,759 management assistants making it a total of 593,326 persons in the public service. A similar number joined the private sector. Consequently 96.5% of the country’s citizens are employed. Job security was ensured and the pension scheme was restored. The scheme was extended to other areas as well thus further strengthening job security. The private sector was encouraged to create more employment opportunities.
Another target was food security, without which, no country, especially a family or an individual can be independent. Hence we introduced various programs to ensure food security. We are also providing houses to people under Divi Neguma which is a boon to the plantation sector, low-income groups in the urban areas – especially Samurdhi beneficiaries and people employed overseas among others. Providing electricity and telephone facilities too have helped to improve living conditions.
In 2003-2004 there were only 1,010,344 motorcycles. By August 2014, the number has increased to 2,852,180. The total number of vehicles in 2005 was 2,527,380 whereas today it has risen to over five million.
We are taking steps to establish an extensive banking network to provide Divi Neguma with the necessary financial facilities. Financial institutions will be strengthened for the same purpose. Due to the steps taken to give tax-free lands, many people who did not have lands of their own will each get a block of land. The money that was hitherto spent on importing agricultural products and fish products will now go to our people, our farmers, our fishermen and other local producers. We have taken various steps to motivate them during the past years.
Expanding self-employment opportunities, assisting women entrepreneurs, paying a guaranteed price for agricultural products and helping to market them and expanding opportunities in the construction and information technology spheres are among the steps we have taken to raise income levels. Whenever possible, we increased the price of paddy per kilo without causing difficulty to the consumer. By increasing the price of paddy from Rs.34 to Rs.40 per kilo under this Budget we have helped to strengthen the rural economy. We also took steps to pay a guaranteed price for potatoes, onions, dried chillies and sorghum. For this purpose we imposed taxes and restrictions. Farmers have been helped and encouraged to grow local products that were hitherto imported by providing them with seeds, fertiliser and knowledge.
Strengthening rural economies
It is necessary to mention here how the rural economy was strengthened as a result. In 2005, the farmer earned only Rs. 38.59 from the sale of red onions. Today the price has increased to Rs. 124.27. For mung seeds he earned Rs. 54.09 in the past. Today he gets Rs. 181.52. For Undu he earned Rs. 45.49 earlier but today he gets Rs. 134.88. His earnings from kurakkan have increased from Rs. 30.75 to Rs. 116.04. Income from peanuts has risen from Rs. 40.73 to Rs. 110.93. Income from potatoes has increased from Rs. 53.23 to Rs. 79.25. We are taking steps to buy potatoes even for Rs. 80. Income from big onions was Rs. 30.84 in the past. Today it is Rs. 86.93. Income from dried chillies has increased from Rs. 95.50 to Rs. 190.31. Soya beans from Rs. 39.67 to Rs. 90.32, Sorghum from Rs. 20.58 to Rs. 31.48. Comparatively the income from every sphere increased due to the rise in production during the relevant period.
Considering paddy production and its price in the paddy market in 2006, the paddy farmer earned Rs. 55,127 million whereas today he earns Rs. 156,533 million. The paddy farmer’s income has increased 184%. In the past, the farmer’s income from sorghum was Rs. 958 million. Today it is Rs. 9050 million. It means an increase of 845% in the income from sorghum alone. From potatoes the income was Rs. 3,073 million whereas today it is Rs. 5,229 million – a 70% increase. From big onions the income was Rs. 1,622 million. Today it is 8,747 million – a 439% increase. From soya beans the income was Rs. 227 million. Today it is 1,460 million – an increase of 543%. In fact, the income from every agricultural product increased. We gave the farmer a fertiliser subsidy, good quality seeds, helped to develop farms and improved his knowledge.
The income of tea small holders, rubber and coconut plantation owners too have risen by the million. Once when the price of rubber went down His Excellency the President introduced a guaranteed price. Within two months the price of rubber went up more than the guaranteed price. When the price of rubber goes down in the world market the price of rubber here inevitably goes down.
When industrialists elsewhere buy rubber at a lower price and supply their products to the world market, our industrialists use local rubber for their products and market them. As a result, they find it difficult to compete with foreign industrialists. This prompted the President to hold a conference with the participation of all those representing the rubber industry. Their one request was for a guaranteed price of Rs. 300 per kilo of rubber. The President has met that request in the current Budget. It is the minimum price. We welcome any increase in the price of rubber.
We gave a big boost to tea small holders under the current Budget. Today their income has increased. For this purpose, special assistance was given under the last Budget for matters like soil and water conservation. We have also increased subsidies given to Kapruka societies to replanting coconuts. Relief was granted to tea, rubber and coconut cultivators every year. It is because the Government has accepted the necessity of introducing new technology and new methods to increase production that it has made big investments in the areas of tea and rubber research.
What we call small export crops, especially cinnamon, too generate a good income since the 95% of the world’s best quality cinnamon is produced in Sri Lanka. We gave a lot of encouragement to cinnamon cultivators during the past years. We welcome the 25% increase in the subsidy for cinnamon cultivation this time.
We have continued without interruption making the country self-sufficient in milk. Several steps were taken in this direction. Whenever possible we took various steps to increase the income of local dairy farmers engaged in the production of liquid milk. We always provided them with knowledge, technology, assistance to build cattle sheds and veterinary facilities and high bred milch cows.
This time the price paid to dairy farmers has been increased from Rs. 50 to Rs. 60 per litre of milk. Since last year, there has been a 56% increase in liquid milk production over the quantity produced in 2005. In order to further boost the production steps have been taken to provide farmers with low-interest loans and to increase by 25% the subsidy given for starting dairy farms. The farms will set up in coconut and rubber plantations where grass will be grown for the purpose. We are confident that we will be able to make the country self-sufficient in milk by 2016.
Providing fishermen with boats, modern facilities, ferries and fishery harbours and houses is also underway. When President was Fisheries Minister he expanded inland fisheries. Under the current Budget steps have been taken to establish 1,000 inland fishery villages.
Exporting ornamental fish is a major source of strengthening household income since there is already a big market for ornamental fish. Today, international attention is gradually diverting to Sri Lanka from Singapore in this connection. Hence greater attention has been paid to the need for encouraging housewives to rear ornamental fish.
We have also paid attention to small entrepreneurs like tailors, barbers and beauticians. It is proposed to provide them with equipment they need and credit facilities.
We welcome the opportunity given to pavement hawkers to build stalls and thereby clear the pavements for the use of pedestrians. This was done gradually under every budget where hawkers in buses and trains were provided with uniforms, identity cards and the initial capital they needed thus making them acceptable in society. Today, the jobs of such people throughout the country have been made secure.
We have also focused attention on creating dried fish producing areas since this business gradually declined over the years causing the country to import dried fish (and Maldive fish). However, many women came forward to restart the industry which will receive a boost under the current Budget.
We have restricted the import of wood products and instead encouraged export of locally manufactured wood products including furniture since it is not right to import such items at a time when local manufacturers go to other countries like India and Australia to promote and sell their wood products. They too have come to our attention in the current Budget.
Since the gem and jewellery industry has reached a very high level, a jewellery town has been established in Ratnapura. All jewellery is manufactured in houses, although they are sold by big companies which have the craftsmen and designers, the contracts to turn out the jewellery. Helping them to find markets will boost the industry and greatly strengthen the country’s economy. With the expansion of tourism and increased arrivals of foreign tourists they should be given the opportunity of purchasing jewellery. Today the number of tourist arrivals has increased from 300,000 to 1.3 million.
We will also encourage the establishment of 300 more large factories. In the past, there were over 10,000 handloom centres. However, previous regimes closed down not only handloom centres run by cooperatives and mahila samithis but also large textile factories like those at Veyangoda, Mattegoda and Thulhiriya. Although today our garment industry has developed 98% of the required textiles are still being imported. Hence the Finance Ministry jointly with the garment manufacturers are preparing to establish the new factories in rural electorates so that they can gradually utilise locally-produced textiles for the manufacture of quality garments.
Tax concessions and investments
Tax concessions have enabled investments in a number of large spheres. Since this country provides free health services, the Government has taken steps to encourage local industrialists to invest in the production of medicines and medicinal drugs in this country.
Our transport system deteriorated gradually and moves were made in the past to destroy the CTB completely. The Railway Department was on the verge of collapse. The private bus services which emerged parallel to this situation have now expanded, providing many employment opportunities. This has to be expanded further and therefore bus operators have been granted many concessions under this budget.
A major investment has been made in the power sector for building power plants to provide everybody with electricity. Providing electricity at concessionary rates is a relief not only to householders but also to small entrepreneurs. The former is given a 25% concession while the latter is given a 15% concession. The abolition of taxes imposed on small businesses has been a boon to small scale entrepreneurs.
The 1% reduction in taxes based on accumulated value is beneficial to consumers. Also the 2.5% reduction in taxes on interest is a relief to small entrepreneurs. Goods transporters, small scale entrepreneurs in the tourism field, parents of school children, school van, mini bus and lorry operators also will benefit from tax reductions.
We are today able to export chicks and make the country self-sufficient in eggs and poultry. Introducing a control price for sorghum has been a relief for poultry farmers.
Since the pay-as-you-earn tax scheme cripples private sector jobs, a maximum of 10% has been imposed on these taxes to generate more interest in private sector jobs. Private sector medical doctors have been given concessions for the manufacture of medicines.
Infrastructure development and utilities
Almost every village without electricity has now been provided with electricity. The few remaining villages too will be supplied with power before the end of the year. It has also been proposed to provide every village with common telephone services. Today not only almost every house but every individual has a phone. The number of mobile phones in the country today exceeds the number of people.
Steps have been taken to supply drinking water without scarcity. The biggest investment was made under the Budget for the provision of drinking water and pipe-borne water. The water obtained from the Kelani River in Biyagama in the Gampaha District is taken to Negombo and from there up to Kurunegala, Anuradhapura, Vavuniya and Mannar. The water from Iranamadu tank in Kilinochchi is taken to Jaffna. Towards the south, water is supplied from Colombo to Hambantota, Monaragala, Ampara and even Batticaloa. Since last week, water is being supplied to Marvil Aru and Ichchalampattu from the Muttur Water Supply Scheme. It has covered the whole country.
Steps have also been taken to provide paddy lands with irrigated water. Preparations are being made to provide water from minor irrigation channels and anicuts to major water supply scheme like Deduru Oya, Yan Oya and Moragahakanda.
By this time 1,210 bridges are under construction and an inter-village transport scheme is to be launched to combine three provinces.
Steps are also being taken to protect villages from wild elephant threats by constructing electric fences and adopting other measures. Funds have also been allocated to compensate for the losses resulting from the destruction of life and property cause by wild elephants.
We have ensured participatory development through Gama Neguma. It also means the emergence of a community leadership. We hope to establish Jana Sabhas in villages.
The dream about the village, mentioned in the Mahinda Chinthana, is now gradually coming true. It is stated thus under Gama Neguma.
“My life bloomed from the scent of the village coming through the kurahan cultivations. Because of such a feeling of beauty and emotion, I wish to make that dream a reality through ‘Gama Neguma.’ I am reviving the village that deteriorated before our eyes during the past number of decades.”
I wish to state in conclusion, that we are taking this country forward under the theme, “First the country, second the country and third too is the country” as the President stated in this august assembly. We wish to thank the Secretary of the Finance Ministry and others who were involved in the preparation of this Budget; the people, trade unions, women’s representatives, business leaders and the President who obtained their views for the preparation of the Budget.
